Loss: CYBG, which has recently bought Virgin Money, has been hit by more PPI claims

Underlying pre-tax profit jumped by 13 per cent to £331million, but CYBG booked a £164million pre-tax loss in the year to the end of September after compensating more customers who were mis-sold payment protection insurance.

The group was stung by £396million of legacy conduct costs, the bulk of which were linked to PPI claims, which came in higher-than-expected.

CYBG said it will increase its PPI provisions by a further £150million as it estimates 83,000 future claims as the August 2019 final deadline to claim compensation approaches.

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Meanwhile, the group is being sued over another type of mis-selling by hundreds of small businesses represented by RGL Management, which expects to make a claim against Clydesdale and its former parent, National Australia Bank (NAB), in the first half of next year.

RGL alleges that small businesses suffered a loss from tailored business loans that were sold to them between 2001 and 2012.

James Hayward, RGL's chief executive, said he is 'extremely confident' about the legal merits of the case.

'This is especially so given the persistent failure of both defendants to disclose pertinent information requested repeatedly over a period of nearly a year as part of pre-action protocol correspondence.'

But a CYBG spokeswoman said they were 'enraged' and that 'no claim has been received'.

'The allegations contained within the correspondence are not accepted by the bank and if necessary will be defended in the strongest terms possible,' the spokeswoman added.

The accusations come as CYBG, whose £1.7billion takeover of Virgin Money was given the green light last month, warned about the impact of Brexit.

'We have planned for a period of uncertainty, but it is impossible to ignore the lower levels of business confidence, especially for SMEs, while the final specific outcome of negotiations remains unclear.'

The group said mortgage lending and core small and medium enterprise increased by 4.5 per cent and 5.6 per cent respectively in the year, but net interest margin dropped to 2.17 per cent from 2.27 per cent.

CYBG's takeover of Virgin Money has marked one of the first major banking deals since the financial crisis

It has created the UK's sixth largest bank with assets of more than £70billion and more than six million customers.